Chapter 4: Q. a (page 77)
Why do you suppose that online dating companies provide each customer with only a small set of virtual roses to attach to date invitations?
Scarcity increases the value.
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Consider Figure 4-1.The current demand and
supply curves areD,and S₁,at which the equilib
rium price and quantity are P₁ and Q₁.If there isa
decrease in the price of an item that consumers
regard asasubstitute for this good,which curve
shifts,and in which direction does it shift?What
happens to the market clearing price and to the
equilibrium quantity?
There are simultaneous changes in the demand for and supply of tablet devices, with the consequences being an unambiguous decrease in the equilibrium quantity of these devices but no change in the market clearing price. What changes in the demand for and supply of tablet devices could have generated these outcomes? Explain.
Evaluate the effects of changes in demand and supply on the market price and equilibrium quantity
Why might transaction costs of locating a replacement clothing item increase with the number of particular features that characterize that item?
Suppose that government places a ceiling on the price of a medical drug below the equilibrium price.
a. Show why there is a shortage of the medical drug at the new ceiling price.
b. Suppose that a black market for the medical drug arises, with pharmaceutical firms secretly selling the drug at higher prices. Illustrate the black market for this medical drug, including the implicit supply schedule, the ceiling price, the black market supply and demand, and the highest feasible black market price.
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